Direct and indirect effects of grandparent education on grandchildren's cognitive development: the role of parental cognitive ability

The multigenerational social mobility literature is mainly interested in the direct effect of grandparent resources on grandchildren's outcomes, that is, the effect not transmitted through any parent characteristics. Whereas this literature is ever-expanding, findings were inconclusive about whether there is a direct grandparent effect. Some of this heterogeneity may be due to differences in omitted variable bias at the parental level. Our paper contributes to this literature by accounting for a more extensive set of parent characteristics and exploring the mediating role of parental cognitive ability in greater detail. It further tackles methodological challenges (treatment-induced confounders, treatment-mediator interaction) in assessing any direct influences of grandparents by estimating the Natural Direct Effect (NDE) of grandparent education with a regression-with-residuals approach. Using the 1970 British Cohort Study (BCS70), our results show that the direct effect of grandparent education on grandchildren’s verbal and numerical ability is small and statistically non-significant. Estimating the Natural Indirect Effect (NIE), cognitive ability alone can account for more than two-third (numerical ability) or half (verbal ability) of the grandparent effect. These findings stress the importance of cognitive ability for intergenerational social mobility processes. Implications for future research are discussed.